Invester Relations

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    A Substantial Increase in Both Consolidated Operating Income and Recurring Profit

I would like to take this opportunity to thank all shareholders and other investors for their continued interest in and support for Circle K Sunkus. Today, October 3, we announced our earnings for the first half of the fiscal year ending February 29, 2012.

In the first half of the fiscal year ending February 29, 2012, existing store sales on a non-consolidated basis rose 4.6% year on year, exceeding our target by 2.6 percentage points. Existing stores in areas affected by the Great East Japan Earthquake, mainly the Tohoku region, saw a sharp rebound in sales amid the recovery effort and contributed to this increase. Another significant contributor was an increase in tobacco sales as a result of prices rising from a tax hike last October. Sales remained brisk in ready-made food products such as fast food and delicatessen items, and a spate of hit products among mainstay original merchandise in the dessert and countertop fast food categories, such as Tenshi no Pudding (Angel’s Pudding) and Yakitori (grilled chicken skewers), continued to underpin sales. As a result of the foregoing, consolidated operating income increased a substantial 26.3% year on year, to ¥13.29 billion, and recurring profit increased an equally substantial 26.9% year on year, to ¥13.15 billion. By contrast, the Group recorded a ¥4.02 billion impairment loss on fixed assets and ¥0.82 billion loss due to disaster. Consequently, net income decreased 19.0% year on year, to ¥3.22 billion. Please view our earnings report for further details on operating results for the first half of the fiscal year ending February 29, 2012.

For the second half of the fiscal year, Circle K Sunkus will continue focusing expenditures on key measures to strengthen sales capabilities in terms of store operations, launching additional sales promotions such as television commercials and enhancing the service and product offerings of countertop fast foods. We will relentlessly continue to build up our sales momentum, even after the base effect of the tax hike on tobacco sales runs its course at the end of September. On the product development front, we will expand our offering of the UNY Group’s Style ONE line of private-label items. Capabilities of the Circle K and Sunkus franchise in countertop fast foods will be strengthened and differentiated as we work to develop new hit products in sequel to Yakitori and expand the installation of freshly brewed coffee dispensers to about 4,000 stores, or more than 60% of our chain. The sales potential and customer footfall of Circle K and Sunkus stores, furthermore, will be enhanced by introducing an automated ordering system for general merchandise that we designed to prevent stock outages and opportunity losses. On the store development front, the Group began opening and developing stores under a new mini-store format this fiscal year and plans to open 10 of these stores before the fiscal year ends-including the 3 stores opened in the first half.

For the third quarter and beyond, we will continue to promote the various initiatives I just mentioned and, by enhancing the sales capabilities of our franchisees in this way, endeavor to improve the Circle K Sunkus Group’s earnings performance further. We look forward to the continued support of all our shareholders and other investors.